Comprehensive Tax Guide to Taxes in Japan for Freelancers (2025)

Working as a freelancer in Japan, whether you hold a work visa, are married to a Japanese national, or are a permanent resident, means navigating a complex system in Japan for tax return filing. This guide is tailored to help freelancers and sole proprietors understand how much taxes in Japan for freelancers you’ll owe, what needs to be filed, and how to file your taxes accurately and on time.

Key Tax Obligations for Freelancers and Sole Proprietors

As a freelancer or sole proprietor in Japan, you're required to manage multiple types of taxes—some automatically withheld from their income, others that must be self-reported.

1. National Income Tax

This is individual income tax based on your annual income (January 1–December 31). The national tax agency applies progressive rates from 5% to 45%. If you’re working from home, keep clear records of income and expenses.

You must file a tax return by March 15 of the following year. Failure to submit your tax return can result in interest or penalties.

2. Local Inhabitant Tax (Resident Tax)

This local tax is about 10% of your income from the previous year, collected by your local tax office. It's billed in four installments (June, August, October, January). Unlike income tax, this tax is calculated and billed based on your previous year's taxable income.

3. Enterprise Tax

Freelancers with business income above roughly ¥2.9 million pay this prefectural-level tax (typically 5%). Payment is due in two parts, generally August and November.

4. Consumption Tax (VAT)

If your freelance work earns over ¥10 million annually or you're registered under the new invoice system, you're required to collect and remit consumption tax at a standard rate of 10%. You must file by March 31.

Important: The invoice system (introduced in 2023) is mandatory for freelancers issuing invoices that enable clients to claim tax credits. Once you opt in, you can't go back—even if your income drops.

Registering Your Freelance Business

Filing a Business Opening Notification

When you begin freelancing in Japan, you must notify your tax office within one month by filing a “business-opening notification.” If you don’t, you risk losing access to key deductions and tax benefits.

Choosing Between Blue Return and White Return

Japan offers two tax filing systems:

Feature	Blue Return (Recommended)	White Return
Special Deduction	Up to ¥650,000	None
Family Salary Deduction	Allowed	Limited
Loss Carry Forward	3 Years	Not Allowed
Bookkeeping	Detailed	Simple
Must Apply	Yes	No

Opting for the blue tax return system is strongly recommended for most freelancers. It allows significant deductions but requires organized bookkeeping. You must apply within two months of starting your business or by March 15 of the following year.

How to Calculate Taxable Income as a Freelancer

To estimate how much income tax and other taxes you owe, start with this formula:

Examples of Deductible Business Expenses:

Rent (home office or co-working space)
Utilities (portion used for business)
Computers, equipment, software
Business transportation and travel
Professional services (accountant, consultant)
Client entertainment (reasonable amounts)
Business-related education
Marketing and advertising
Language courses (if relevant to your work)

Tip: Keep all receipts for at least 7 years (if using Blue Return).

Personal Deductions You Can Claim

Basic deduction: ¥480,000
National Health Insurance and National Pension contributions (fully deductible)
Spouse deduction: ¥380,000 (if spouse earns under ¥480,000/year)
Dependent deduction: ¥380,000 per eligible dependent

Freelancer Tax Example

Scenario:
Emma is a freelancer in Japan, working as a video editor. Her 2024 earnings were ¥5,500,000. She spent ¥1,500,000 on business-related expenses. She paid ¥250,000 for health insurance and ¥200,000 into the pension system. She is married and her spouse earns no income.

Step-by-step tax return:

Net business income = ¥5,500,000 – ¥1,500,000 = ¥4,000,000
Minus Blue Return deduction = ¥4,000,000 – ¥650,000 = ¥3,350,000
Minus personal deductions = ¥1,310,000 (basic + pension + spouse)
Taxable income = ¥2,040,000

Taxes owed:

Income Tax Amount:
¥2,040,000 × 10% – ¥97,500 = ¥106,500
Reconstruction Tax (2.1%) ≈ ¥2,236
Total National Tax: ≈ ¥108,700
Resident Tax: ≈ ¥210,000 + ¥6,500 per capita levy
Enterprise Tax: ¥55,000
Consumption Tax: Not applicable (under ¥10 million)

Total tax payment: ≈ ¥380,200 (~9.5% of net income)

Filing Your Tax Return in Japan

Options:

e-Tax (Recommended)
File online using your MyNumber Card or e-Tax login. Ideal for bilingual or tech-savvy freelancers.
Paper Filing
Submit forms to your local tax office in person or via mail.

Deadlines:

Income tax return: March 15
Consumption tax: March 31 (if applicable)

Even if your income is low, you need to file a tax return, especially for visa renewals or to receive a refund if you're eligible.

Tax Pitfalls Freelancers Should Avoid

Late or missed filing: Always file your taxes on time—even if you can't pay in full.
Poor recordkeeping: Especially important for those claiming the blue tax return.
Forgetting local taxes: Resident and enterprise tax are billed months later and often forgotten.
Not saving for taxes: Set aside at least 20–30% of your income.
Overstated deductions: Overclaiming can trigger audits.
Mixing personal and business finances: Use separate accounts.

Practical Tax Tips for Freelancers in Japan

Use Accounting Software: Tools like Freee or Money Forward (both offer bilingual interfaces).
Hire a Tax Accountant: A good one can help you navigate withholding tax, deductions, and save you from errors.
Plan Around Your Tax Bill: Adjust your pricing to reflect taxes and social insurance.
Stay Informed: The tax law changes frequently. Follow updates from the national tax agency or hire bilingual experts.
Declare your income honestly: Even income from a side job must be reported if it increases taxable income.

About the Invoice System in Japan

The invoice system (適格請求書保存方式) is a 2023 update affecting small businesses and freelancers. If you issue invoices to businesses, registering allows your clients to reclaim consumption tax. However, it also means you're obligated to collect and pay this tax—even if your income is below ¥10 million.

Tip: If most of your clients are individuals or don’t care about invoice tax deductions, it may be best to stay exempt.

Understanding Tax Obligations for Side Jobs or Extra Income

Many freelancers also have income from a side job or multiple streams of income. If your side job is less than ¥200,000 annually, it might not need to be declared—but exceeding this threshold means you need to file a tax return.

Blue Return vs White Return: Which Filing System Is Better?

Feature	Blue Return	White Return
Tax Deduction	Up to ¥650,000	None
Employee Salary Deduction	Yes	Limited
Loss Carryforward	Up to 3 Years	Not available
Filing Requirements	Complex, but beneficial	Simple

If you’re serious about freelancing in Japan, prepare your tax return properly using the blue return system.

Resources for Tax Filing in Japan

Final Thoughts: Managing Taxes as a Freelancer in Japan

Taxes in Japan for freelancers can be complicated, but with the right preparation, you can reduce the amount of tax you owe and avoid any legal issues. Whether you're just starting freelance work or have been a freelancer in Japan for years, proactively managing your taxes ensures:

You're compliant with Japanese income tax laws
You maintain eligibility for visa renewals
You avoid underpayment, penalties, or audits

If you're unsure, talk to a bilingual tax accountant, especially in your first year or if you're juggling us taxes and Japanese income. With the right system, tools, and strategy, freelancing in Japan can be both rewarding and financially secure.

Guide to Taxes in Japan for Freelancers